Premier Foods’ owner Hicks, Muse, Tate & Furst will be watching next month’s flotation of drinks and snacks giant Cantrell & Cochrane closely to assess the current appetite for food stocks, said analysts.
The Cantrell & Cochrane sale, the second attempt to float the company in two years, may give Hicks, Muse an indication of what Premier might raise in the current climate, according to one analyst.
However, estimates of a £1.2bn valuation for Premier Foods, which owns Typhoo, Sun-Pat and Branston, looked ambitious, he claimed. “Ambient packaged groceries are not at the sexiest end of the market. I was a little surprised by the announcement, although there has been a lot of activity on the Alternative Investment Market.”
Burton’s Foods, which operates as a standalone business, and Weetabix, which was only acquired last year, are not likely to be included in any flotation plans, said sources close to both companies.
Although Merrill Lynch had been asked by Hicks, Muse to look at a range of exit strategies for Premier including a trade sale, companies able to afford it were selling rather than buying these types of asset, said another analyst. “I don’t think it is going to set the world on fire.”
As Hicks, Muse had yet to make any material changes at Weetabix, bolting it on to Premier so soon for a sale would not realise its true value, said one corporate finance source. “They haven’t really had any chance to drive costs out of the business. The interesting question is, how much of Premier will they float? After all, the rationale behind buying Weetabix was about synergies with Premier. I think they will still want to keep a large stake.”
Hicks, Muse, Tate & Furst declined to comment.
The Cantrell & Cochrane sale, the second attempt to float the company in two years, may give Hicks, Muse an indication of what Premier might raise in the current climate, according to one analyst.
However, estimates of a £1.2bn valuation for Premier Foods, which owns Typhoo, Sun-Pat and Branston, looked ambitious, he claimed. “Ambient packaged groceries are not at the sexiest end of the market. I was a little surprised by the announcement, although there has been a lot of activity on the Alternative Investment Market.”
Burton’s Foods, which operates as a standalone business, and Weetabix, which was only acquired last year, are not likely to be included in any flotation plans, said sources close to both companies.
Although Merrill Lynch had been asked by Hicks, Muse to look at a range of exit strategies for Premier including a trade sale, companies able to afford it were selling rather than buying these types of asset, said another analyst. “I don’t think it is going to set the world on fire.”
As Hicks, Muse had yet to make any material changes at Weetabix, bolting it on to Premier so soon for a sale would not realise its true value, said one corporate finance source. “They haven’t really had any chance to drive costs out of the business. The interesting question is, how much of Premier will they float? After all, the rationale behind buying Weetabix was about synergies with Premier. I think they will still want to keep a large stake.”
Hicks, Muse, Tate & Furst declined to comment.
No comments yet